Hammersmith & Fulham to raise cash by letting voids at market rates
Council reveals private rent plan
A London council has asked the government for permission to rent its empty social homes at market rates.
Conservative-led Hammersmith & Fulham Council said that allowing local authorities ‘the same freedom as housing associations’ to let void or new build properties on the private market could help generate income to reinvest in new affordable housing.
Andrew Johnson, cabinet member for housing at Hammersmith & Fulham, said the council envisaged offering no more than 50 out of the 500 homes that become void every year at market rent, which could be up to three times the current rate.
Mr Johnson added the council was considering the idea in response to the self-financing reform of the housing revenue account under which the west London authority took on £218 million of debt, leaving it with annual interest payments of £12 million. It has just £33 million of ‘borrowing headroom’ beyond its HRA debt.
‘We’re under pressure to balance the housing budget,’ he said. ‘This would take cost out of our HRA [settlement].’
Hammersmith & Fulham has 13,000 rental properties and a waiting list of 10,000. But Mr Johnson said changing the tenure of ‘a small proportion’ of the council’s stock would create ‘a little bit of churn’ and would allow people to move out of social rent homes. ‘All we’re saying is that if you could give local authorities a little more freedom on how they manage their assets they could unlock investment,’ he added.
Mr Johnson said he expected more councils would seek to charge higher rents after September’s conclusion of the government’s ‘pay to stay’ consultation on high-income tenants living in subsidised housing.
Hammersmith & Fulham has also called on the government to allow councils to keep all proceeds from property sales, including from right to buy, to build new homes.
The call came in a response to last week’s Montague Review, which recommended ways to bring new investment into the private rented sector. These included encouraging councils to waive affordable housing obligations in favour of building more private rent homes on new developments.
Earlier this week, the G15 group of leading London housing associations warned that Montague’s recommendations could threaten the capital’s affordable housing targets and put increased pressure on the housing benefit bill.